In December 2009 Serbia remained undecided on whether to open its mission to NATO, in accordance with its membership in the Partnership for Peace program, which Belgrade had signed in December 2006. In April 2008 Serbia had signed the Stabilization and Association Agreement. Interim trade provisions in the agreement were initially blocked by The Netherlands, which demanded that Serbia first arrest two indicted war criminals: Bosnian Serb Gen. Ratko Mladic and Goran Hadzic, former leader of Croatia’s Krajina Serbs. At the EU foreign ministers meeting in December, however, the Dutch government lifted its opposition after a report by the International Criminal Tribunal for the Former Yugoslavia’s chief prosecutor, Serge Brammertz, stated that Serbia made “constant progress” in efforts to cooperate with the court. The move would thus enable Serbia to attract more foreign investment and expand trade with EU member states. Belgrade submitted an application for EU candidacy late in December.

In July the National Assembly passed the Act on Regional Development in an effort to equalize economic development by reducing the differences between developed and undeveloped parts of the country and to deal with regional imbalances due to an aging population that had impact on revenue sharing and distribution. Government figures showed that average incomes in Belgrade were 19 times larger than those in the eastern town of Bor and that the amount of money in circulation in the capital was equal to that spent in more than 80 southern and eastern municipalities combined.

According to Eurostat, some food prices in Serbia were among the highest in southeastern Europe. The average family of three in Serbia spent more than 40% of its income on food. Gross monthly income per worker in October was about €465 (1€ = about $1.45), a decrease of 1% year-on-year. The Serbian Chamber of Commerce reported that salaries were being paid 45 days late in the country’s poorest areas, raising fears of potential social unrest.

The World Bank approved a $400 million loan to assist the Serbian budget for 2009 and 2010. Russia approved a loan package amounting to about $1 billion, of which $200 million was earmarked for Serbia’s budget. Part of an IMF arrangement called for a reduction in the number of national government employees (from 31,000 to 28,000) and local administrative cuts of some 10,000 workers.

Serbia’s central bank reported a dramatic rise in the number of insolvent companies; some 13,000 company accounts were blocked in 2009, bringing the total to 63,000 businesses that owed €3 billion. Companies were also indebted to the government for about €655 million in unpaid taxes.

Little progress was achieved in reforming the education system in light of the increasing demands for a highly trained and diversified labour force needed to compete in the global economy. Only about 10% of the population had completed a postsecondary education.

The EU reported that civil and political rights improved and that minority rights were largely respected in Serbia. Observers expressed concern, however, over sporadic violence and deep divisions within the Muslim communities in the southwestern region of Sandzak. Tensions were also on the rise in the northern autonomous province of Vojvodina and in the predominantly ethnic Albanian region of the Presevo Valley, where activists were demanding autonomy and possible unification with neighbouring Kosovo. In December, Vojvodina’s provincial assembly adopted a statute giving the ethnically mixed region a new constitution. This would allow the province more legislative, diplomatic, and economic autonomy. The move, which was approved by Serbia’s parliament, partially restored Vojvodina’s autonomy, which it had lost in the late 1980s.

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